Jim Cramer on Big Tech Earnings: Microsoft, Meta, and the Figma IPO Frenzy

The Figma IPO Phenomenon

• 💡 The Figma IPO dominated market discussion today, pricing at $33, opening at $85, and closing over $115, overshadowing major Big Tech earnings.
• ⚠️ Cramer highlights that Figma's valuation, trading at over 60 times sales, represents euphoria and a potential sign of market froth, contrasting sharply with earnings-driven valuations.
• 📉 The market saw a decline, with the Dow sliding 330 points, S&P down 0.37%, and NASDAQ slightly negative, attributed by Cramer to the Figma frenzy rather than macroeconomic factors.

Big Tech Earnings: Microsoft and Meta

• 🚀 Microsoft, briefly a $4 trillion company, and Meta, nearing $2 trillion, both smashed earnings estimates by billions, largely due to significant investments in artificial intelligence.
• 📈 Microsoft, trading at roughly 35 times earnings, gained nearly 4%, while Meta, at less than 29 times earnings, jumped over 11%, demonstrating strong performance despite their large market caps.
• 💰 Cramer argues that despite their size, Microsoft and Meta are still reasonably valued compared to the S&P 500's 24 times earnings, especially considering their superior performance and AI-driven growth.

Valuation Concerns and Market Outlook

• 📊 The core issue is the market's focus shifting from price-to-earnings (P/E) multiples, used for established giants like Microsoft and Meta, to price-to-sales (P/S) multiples, exemplified by Figma.
• 🚫 Cramer warns that a market driven by ludicrous P/S valuations, like the dot-com bubble, is unsustainable and potentially damaging, referencing "Fake Newton's Law" (what goes up must come down).
• ✅ He hopes the market can return to focusing on earnings and sensible valuations, suggesting that if P/E multiples remain the benchmark, the bull market can continue.

Other Notable Companies

• 📦 Amazon reported better-than-expected sales across divisions, though guidance was mixed; Cramer considers it a buy despite after-hours stock drops.
• 🍎 Apple showed substantially better sales and earnings, driven by strong iPhone performance and an improved Chinese market, proving its resilience with 10% revenue growth.
• 📉 Companies like Qualcomm were down significantly, and Cramer expressed skepticism about Spotify and Wendy's earnings outlooks.